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August Trade Deficit Expands as Exports Shrink Slightly

July’s report revised to smaller gap.

The U.S. international trade deficit expanded slightly for August, according to a Commerce Department report (link opens in pdf) released today.

After a revision pushed the original July deficit down from $39.1 billion to $38.6 billion, August's overall deficit clocked in at a slightly higher $38.8 billion. Analysts were pleasantly surprised by the news, having expected a modest expansion to $40 billion.

Deficits expand in two ways: (1) exports decrease more than imports, or (2) imports increase more than exports. The latter scenario is generally favored over the former, as bigger exports are more closely associated with an internally strong economy. August's results show the former, where imports remained relatively unchanged as exports took a slight 0.1% dip.

Source: census.gov

While the goods deficit increased $0.1 billion, the services deficit remained relatively unchanged at $19.4 billion. A $1.3 billion dip in industrial supplies and materials exports was the primary push behind the goods deficit expansion .

The U.S. currently enjoys its largest trade surplus for goods with Hong Kong ($3.7 billion ), while a $29.9 billion deficit in China keeps our nation's international trade numbers in the red.